Commentary on startups, small business, business planning and growth strategy

Posts from February 2006

Feb 18, 2006

Now that I have your attention, let me explain. OK, maybe you do need to create a presentation to go with your business plan. You're looking for investors or competing for venture prizes, perhaps.

Don't do a business plan presentation. Instead, do a presentation, start to finish, about your business. The plan is one thing, the slide show is another. Don't confuse the two.

Don't even think about copying words from your plan to your presentation. That's ugly. Slideshows are a different medium.

Some say you should do the presentation first, then the plan.

The most you can take directly from your plan into your slide show will be some charts. Remember as you do that -- and if you do that -- you're going to talk directly to your listeners about the conclusions they should draw from the chart. Don't tell them what the chart says.

The Highlights chart showing annual sales, gross margin, and net profit is good, but just show the chart, skip the bullet points.

You can use a graphic chart break-even analysis to showing how much you need to sell in a month to cover costs.

A good-looking pie chart can show your market segmentation.

Use bar charts to show sales by product or service.

Use a bar chart to show you cash flow projections illustrating the projected cash balance for 12 months.

If you're doing a plan and a presentation, particularly for a start-up business, read and follow Guy Kawasaki's recommendations in his 10/20/30 post on his blog. He's even got a suggested topic list for your 10 slides. You'll end up dropping most of the charts I recommended above, which is fine, his way is better.

The idea of bad powerpoint isn't particularly new and isn't particularly mine either. Like every good idea, it seems to have been something that came up at the same time from a lot of different people. Some of them were articulate writers, so we have their writings to point to.

My favorite is Guy Kawasaki's chapter on PowerPoint in his book The Art of the Start. In his blog piece (the one I I recommended above) he recommends a post by Garr Reynolds on his blog Presentation Zen. There's a recent post by Marc Orchant called Humanizing PowerPoint that is very good and cites several others worth readings. From there you can go to Cliff Atkinson's Beyond Bullets, and he'll take you back to Seth Godin, who wrote the cornerstone piece on bad Powerpoint.

If you're going to do a presentation related to your business plan, read this stuff. Do it right.

Feb 17, 2006

Displacement:In the real world of small business, everything you do is something else you can't do.

Understanding displacement is vital for business planning, vital for growing a business, vital for small and medium business in particular. Consider the picture here, marbles dropping into a full glass of water. The water comes splashing out of the glass and onto the table. That's a good illustration of displacement and how it works in business.

I've seen it so many times: trying to plan their business, people start making lists of things that ought to be done and end up with huge unrealistic and impossible business plans because they haven't come to terms with displacement.

Everything you do displaces something else that you can't do. Learn to live with this and you'll do better planning your business, and, particularly, growing your business.

Feb 10, 2006

I've posted a multimedia presentation on the top 10 planning mistakes in competitions. It's a fun presentation, a top 10 list like the late show. Some of the mistakes discussed are the hockey stick forecasts, trusting your patents to protect you, thinking you have no competition, and, of course, not projecting cash flow right. It has voice and slides, so I hope you enjoy it.

The original presentation was in a series of webinars sponsored by the University of Oregon's New Venture Championship in April.

I like the Oregon competition, I've been a judge for that one seven or eight times. It gets a good field of national and international MBA programs, some good plans, good feedback from the judges. It also has $65,000 in prizes. It may be too late to enter for this year's competition on April 13-15, because the preliminary judging rounds are already underway; but they do this every year, so I recommend it to you for next year if you're involved in an MBA program.

Feb 07, 2006

The original title of this piece was "business plans are made, not found." It comes from my childhood memories of the Wheaties ad campaign of the 1950s. The slogan was "Champions are Made, not Found."

The same applies to business plans. You make one, you don't find one. You develop your own.

This comes up a lot these days because -- I think-- of sample business plans. The spread of sample business plans is a real problem for the greater good of better business planning. And unfortunately, I might be part of what caused the problem. Gulp.

I started sample business plans at Palo Alto Software in 1987 with the first "Business Plan Toolkit," which included the original versions of Acme Consulting and AMT, the computer reseller, which I had written for clients.

Digression: If you're curious, google one or the other and see how widespread they are. By the way (and not the point of this post) but there are a few with permission (the SBA, for example, has permission to use AMT as a sample on its site) but there are a lot of people just copying and calling it their own. Seems like there are hundreds of them out there. Only a very, very few have permission. Most are pirates. End of digression.

The idea of including sample plans was as something that came with the business planning product to help people understand what a business plan looks like, what it covers, and how it comes together. We included 10 real sample plans in late 1994 when we released Business Plan Pro. People liked the samples, so we included more. We polled the users and came up with real plans from real businesses to make it 20 sample plans with our version 2 in February of 1996, and 30 sample plans with version 3, in May of 1998. People really liked sample plans as part of the product.

Then the idea spread. People started buying and selling sample plans. Our life as market leader became very complicated when a competitor bought 100-some sample plans from a book compilation and included them as Adobe PDF files with some business plan software. They didn't tell their customers that the plans were just electronic documents, didn't work with their software, and most didn't even have financial information, but they did cause a stir in the market. We had to work like mad to get 250 real plans, all of which worked within Business Plan Pro and had financial data, to compete. We sponsored business plan competitions, and paid our customers, looking for real plans.

So the race was on. By this point we had our version 2002 (equivalent to version 5) of Business Plan Pro out. People started selling sample plans on the web, most of them poorly-disguised knock-offs of our sample plans exported from Business Plan Pro and massaged slightly. We've had several legal battles with people using our work to compete against us. We're up to 500 sample business plans with Business Plan Pro now, and, frankly, I hate it.

Here's the problem: when it was two sample plans or even 10 sample plans, people generally understood that they were supposed to give you an idea of what a plan is. Now with hundreds of sample plans available, some people naturally think their own business plan is supposed to be one of those 500.

Frankly, as author and professional business planner, I hate this idea. People are buying and selling finished business plans as if they were term papers (also a bad idea) for college students. It's really spreading, and it's a bad idea. Not just wrong because of plagiarism, but wrong because it doesn't work and clouds business planning.

I get the question all the time: "Do you have a plan for x x x ..."

Which brings me back to the title of this post. I want to tell everybody that finding a business plan you can use is a really, really bad idea. You make a plan, you don't find one. Obviously, every business is unique. Every business plan is unique. You don't want to find a business plan because even if it happened to be a plan for a business very much like yours, it would never have the same owners, the same management team, the same strategy, and probably not the same market or location either.

Sure, I recognize that a sample plan can help in several ways. You can find out how somebody else defined the units and prices in a business, what their expense projections were and for what categories, and how they described their market.

But I strongly recommend you start at zero, and write your own plan. Refer to samples for some hard points, perhaps, but start with an empty plan. If you're using Business Plan Pro, the wizard takes you through the process step by step, tells you what you need to include and why at every step, so you just tell your own story and do your own numbers. If you start with somebody else's plan it's going to be very hard to distinguish your own ideas from theirs. You're going to end up with a hodge podge of rehash.

I just can't believe people are buying and selling sample business plans as stand-alone documents, but they are. It's bad enough that we have samples readily available for editing and modifying within the business plan software, but then you have several websites selling finished sample plans without any software, just as Word documents or worse. Most of these are the same plans recirculated, essentially stolen, but even that isn't why they are a bad deal. It's like buying a novel as a Word file and trying to get it published, it's a bad idea.

Feb 06, 2006

I guess it's a day to talk about borrowing. Here's another startup that's formalizing the marketplace for person-to-person borrowing and lending. If you need funds to get your business going, this could be a place to look.

Not everyone starting a business get's VC money. Infact, very few do. For the rest of us, borrowing money from the bank or friends and family is how we start our businesses.

A new company on the block helps borrowers and lenders formalize that relationship:LoanBack

In some ways, it's very similar to Circle Lending which is going after the same market. I suggest checking both of them out if you are looking to borrow any money from friends and family. At the end of the day, these borrower/lender relationships are always much better if they are well documented at the start.

Feb 01, 2006

Students from all colleges and universities are invited to participate for a grand prize of $25,000 in the 2006 Peltier Business Plan Competition offered by The University of Texas at Tyler College of Business and Technology

Good article over at StartupJournal with an entrepreneurial story about Vitamin Water. Interesting insight into what it takes to get retail shelf space when you're just starting out. It turns out that it's just guts and perseverance... If you're an entrepreneur, you already have that.